Real estate

Levelling Up and Regeneration Act brings potentially significant change for real estate in England

Published on 1st Nov 2023

The Levelling Up and Regeneration Act is a wide-ranging and ambitious piece of legislation, with the potential to drive fundamental reforms affecting planning and real estate in England

The government's stated aim for the Levelling Up and Regeneration Act is to "..deliver revitalised high streetsspeed up the planning system, hold developers to account, cut bureaucracy, and encourage more councils to put in place plans to enable the building of new homes". It became law on 26 October 2023 but will depend on secondary legislation for much of the implementation and detail.

Disclosure requirements for the controllers of land

Potentially wide powers are granted to enable regulations that would require the disclosure of information about those who control land. This could see details such as parties and terms relating to land arrangements which are currently "off-register" and confidential, brought into the public domain via the Land Registry's open-access register.

Any exercise of this power would be subject to consultation on the detail, but in-scope arrangements would be likely to include option agreements, promotion agreements and pre-emptions.

Rental auctions for vacant high-street premises

Controversial powers for local authorities to essentially step into the owner's shoes and hold a rental auction for certain unoccupied properties have been included in the Act.

A consultation on the detail took place earlier this year and the outcome will inform the shape of implementation. For details on the types of unoccupied properties that will be affected and the proposed process for disposals, please see our earlier Insight.

New Infrastructure Levy

A new Infrastructure Levy is to replace the Community Infrastructure Levy. The new levy is intended to simplify and speed up the process, and represent a fairer system that will be more accessible to smaller builders.

It would be based on a proportion of the development value of the land, moving the system away from the current land value capture approach. The change will be introduced piecemeal and is likely to take 10 years to fully implement

Planning change

Other key amendments to the planning regime include the following:

Local authorities are to be required to have a single local plan with a design code. In addition, national development policies are to be set out, providing guidance in relation to common planning considerations such as the green belt and flood risk. An update to the National Planning Policy Framework is to follow.

Compulsory purchase is being encouraged via a new ability to disapply the "hope value" when compensating owners "where justified". Hope value takes into account what planning permission could be granted should the compulsory purchase scheme not proceed so its disapplication will allow local authorities to acquire land at substantially reduced cost. The measure is intended to facilitate regeneration and the provision of affordable housing.

Slow build-out rates become a consideration for the determining authority in the planning process.

Registration schemes for short-term rental properties are envisaged to give local authorities outside London greater control over such arrangements. London is already subject to rules of this nature.

Pavement licence changes (making it easier for restaurants to seat their customers on the public highway) introduced during the pandemic are made permanent in an effort to boost the hospitality sector.

Planning enforcement powers are strengthened. This includes an extended enforcement period for breach of planning control which has been increased from four years to 10 years from the date on which operations were substantially completed. Local authorities are also given the ability to increase fines and planning fees.

Environmental Outcomes Reports are to replace the current EU derived environmental impact assessments on planning applications. The change aims to simplify and streamline the assessment process, requiring developers to embed environmental considerations at an early stage against a backdrop of a clear outcomes-based process. Consultation on the detail of the new reporting requirements took place earlier this year.

Osborne Clarke comment

The Levelling up and Regeneration Act offers a framework for major changes to the current rules governing planning and the control of real estate in England. However, the shape of the new landscape will very much depend on the detail of implementing regulations and how local authorities approach their new powers. Watch this space for further updates as the impact becomes clearer.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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